Fusion proteins (named PMLRAR) between PML and the retinoic acid receptor alpha (RAR alpha) are generated as a result of the t(15;17) chromosomal translocation found in acute promyelocytic leukemia (APL). We show here that PMLRAR proteins exist in solution as stable homodimers whose formation is mediated by a presumptive coiled coil in the PML moiety. In contrast to RAR alpha, which requires heterodimerization with RXR for efficient DNA binding, PMLRAR homodimers can bind to target sequences in the absence of RXR, and the binding pattern of PMLRAR homodimeric complexes to directly repeated motif (DR) response elements with 1-5 bp spacers is different from that of RAR/RXR heterodimeric complexes. We show that the presence of RXR induces the formation of PMLRAR/RXR heteromeric complexes which bind to DNA via one RAR DNA binding domain (DBD) and one RXR DBD, like 'classical' RAR/RXR heterodimers. PMLRAR interaction with RXR occurs in solution and in transfected cultured Cos cells, and PMLRAR is able to sequester RXR efficiently in the cytoplasm, suggesting that dominant 'inactivation' of RXR may be a possible mechanism of action for PMLRAR. Accordingly, we show that PMLRAR can both prevent the binding of the vitamin D3 receptor (VDR) to a target sequence in vitro and inhibit vitamin D3-dependent activation of a VDR-responsive reporter gene in transfected cells. These results suggest that both the distinct DNA binding properties of PMLRAR homodimers and the sequestration of RXR by PMLRARs may contribute to the molecular mechanisms which underlie the pathogenesis of APL. We also report that RXR alpha transcripts are down-regulated by RA-treatment in promyelocytic cells.